Trickle Downers

The Prospect's ongoing exposé of the folly, dysfunctions, and sheer idiocy of feed-the-rich economic policies.

Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.

trickle-downers.jpg When inmates are able to speak to friends and family while incarcerated, it not only improves their lives, but also, studies have shown, reduces recidivism after they leave prison. But to fill in budget holes or to make a profit, many state and local governments work with companies that put a high price tag on this basic need for the incarcerated. A handful of companies monopolize the prison phone industry, and their control of the market allows them to charge exorbitant rates for inmate calls to their homes. States that contract with these providers tend to choose the contractor that provides not the lowest price, but the highest commission rate for the state. As a result, prisoners and their families may pay up to $1 per minute on a call. In addition to the lucrative phone call industry, prison phone companies have begun to dabble in providing video visitation services, mostly to jails. Instead of meeting a prisoner in person, friends and families can chat with...

trickle-downers_35.jpg After the populist surge that put Donald Trump in the White House, Steve Mnuchin tried to rebrand himself as a man of the people. He promised that as treasury secretary that he would unburden the working class and that the rich shouldn’t expect any sort of preferential treatment. Many observers were very skeptical of these promises—and for good reason. Appearing on Meet the Press this week, Mnuchin had been tasked with defending the Republicans’ new tax framework . But he couldn’t really explain it. Mnuchin repeated like a mantra that the “objective” of the tax plan was a “middle-income tax cut” and not a tax cut for the wealthy. Given that he had few real details to offer, Mnuchin could avoid both making promises and giving straight answers, while doubling down on his own dubious projections of how the plan would play out for Americans. But despite his best efforts, he was unable to avoid being caught out on one...

trickle-downers_35.jpg After toiling away for months, the so-called “Big Six” gang of Republican architects have finally unveiled their initial tax proposal, with the feel-good slogan “More Jobs, Fairer Taxes, Bigger Paychecks.” Despite all the political spin in recent weeks from Trump and his lieutenants about how the plan won’t be a big giveaway for the rich (and might even raise their taxes!) and will be a boon for the middle class, the proof is in the paper. As expected, the details of the plan show a proposal that was explicitly written for the rich, with provisions aimed at easing the tax burden of the wealthiest Americans. And for the middle class? Nothing but outright lies and murky promises to iron out the details in Congress. The plan cuts the corporate tax rate from 35 percent to 20 percent, a move that Republicans claim will unleash a surge of economic growth. In fact, it will only serve to further fill up corporate treasuries and enrich...

Target, one of the largest retail employers in the country, announced Monday that it will raise its minimum wage for employees to $11 an hour starting in October, and gradually increase it to $15 an hour by the end of 2020. The new standard applies to Target’s 323,000 regular employees as well as to the 100,000 seasonal workers it plans to hire for the holiday season.

Clearly, Target realizes that the way to attract workers (and reduce turnover) in a tight labor market is not to gripe and moan about a supposed labor shortage but to bump up pay. As the Federal Reserve of Minneapolis President Neel Kashkari put it,“If you’re not raising wages, then it just sounds like whining.”

Walmart’s decision to raise its pay to $10 an hour last year prompted Target to follow suit. Company officials initially required new employees to complete a six-month “training” period before receiving that wage rate. After intense public criticism, they shortened that period to 90 days. Other employers took to the high road years ago. Costco has for several years now paid a starting wage of $11.50 an hour with average wages reaching $21 an hour. The retailer also offers health care to most employees.

But Walmart has more power than any American company to lift up wage standards across the economy. With nearly 1.5 million employees in the United States, Walmart is the largest employer in the country. Yet, Walmart has thus far resisted calls to go higher than $10 an hour. It is nearly impossible to make a living on that kind of wage, especially if you’re working part-time—as many Walmart employees do.

The retail behemoth’s low wages, which force its employees to rely on public assistance programs, cost taxpayers an estimated $6.2 billion in 2013. Employers who insist on taking the low-wage road act as parasites and end up costing taxpayers $152.8 billion every year, according to a 2015 study by the University of California, Berkeley Labor Center.

Target is taking a step in the right direction by getting on a path to $15 an hour. Walmart should follow suit. It can certainly afford to pay its workers more money. In recent years, the company has bought back about $50 billion of its shares, funneling those profits into the Walton family fortune rather than into workers’ pockets.

By paying at least $15 an hour, the company would not only be treating its own employees fairly; it would be lifting up wage standards throughout the economy. To focus the minds of company officials at Walmart and elsewhere, a group of House Democrats have kickstarted an idea: levy a fee on companies equivalent to the amount of public assistance its employees are eligible to receive, since their employers can’t be bothered to pay them fairly in the first place.

Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.

(Photo: AP/Charlie Neibergall) President Donald Trump reacts to supporters after speaking about tax reform at the Andeavor Mandan Refinery, Wednesday, Sept. 6, 2017, in Mandan, N.D. trickle-downers_35.jpg If it seems as though Republican leaders have been on the verge of unveiling their master plan for securing tax cuts for months, it’s because they have. And next week, those GOP’s tax architects may actually get around to announcing to letting the rest of America in on the details. You can tell they’re getting very close to a deal now because they’re putting the word out to anyone who’ll listen that their plan definitely will provide a big-time tax cut for the middle class and definitely won’t lavish huge tax cuts upon the wealthiest households and most profitable corporations. Trump recently had this to say about taxes, “I think the wealthy will be pretty much where they are,” he told reporters at the White House. “If [their tax...